My friend Petros has given up. He has put his shop up for sale and can’t wait to leave behind a business in which he invested the past eight years of his life – the best years of a man who is around 40 and who has shown boundless appetite for work. Gradually – first with the assistance of a relative and more recently on his own – Petros, with his broad smile, managed to gain a foothold in our neighborhood. He managed this even though his goods on offer – organically-grown foods and household products – were more expensive than those you could find in street markets and supermarkets. But we all grew accustomed to paying a little more, sure in knowing that we were buying superior produce. And we all enjoyed the friendly chat with Petros. His store filled up with products and customers. Often he would sell out very quickly, but the next day the shelves would be filled again. His turnover kept growing. In the last few months, though, everything changed. The credit crisis, which started in the United States with the collapse of the subprime housing market, started roiling the waters in our own neighborhood. A few weeks before Christmas, Petros noted that some of his suppliers, who imported goods from abroad, could not raise the cash to pay their suppliers. Greek banks, because of the international credit squeeze, were not granting new loans, were not refinancing old ones and had raised their lending rates sky-high. That’s when the first shortages appeared on Petros’s shelves. But he always managed to find something equally good from somewhere else to keep his customers happy. On Friday, though, he confessed that he could not keep this up. «I’ve lost three of my biggest suppliers. They couldn’t raise credit to keep up their imports and they stopped,» he said. «But people, too, they don’t shop as much. My turnover has dropped to a third of what it was. I can’t keep this up. «It’s one thing to wear yourself down with work when you make some profit and it’s another to be exhausted without seeing any hope. I have put my store up for sale.» Now, Petros is obliged to do something that he had avoided: He is calling up customers who had bought goods on credit and haven’t paid him yet. I followed Petros’s anxious tale over the past months. He would tell me about his suppliers and their desperate effort to borrow with the support of a special fund set up by the government to guarantee bank loans to small and very small businesses. The aim of the fund, known as TEMPME, was to enable businesses to borrow money despite banks’ fears, by guaranteeing 80 percent of the loan. A few days ago, Development Minister Costis Hatzidakis declared that some 5,500 of a total of about 25,000 loan applications had been approved. This would translate into a total of 555 million euros entering the market. «It’s all show,» Petros said. «No one has gotten money from TEMPME.» The truth is somewhere in between: Relatively few loans have been approved and no one knows how much money has actually been paid out in the two months that the fund has been up and running. But at a time when businesses are choking and are in dire need of a lifeline, it is crazy that the scheme should have run aground in this way. The government has every reason to inject money into the market (and has even set in motion a 28-billion-euro bank bailout plan), because the last thing it wants is to be held accountable for the collapse of businesses. The theory is good: TEMPME guarantees up to 80 percent of the loans and the banks find ways to cover themselves for the other 20 percent (which they do using very strict criteria). In this way, the market has sufficient liquidity and the banks are protected against risk. In reality, though, the government did not take into account the banks’ unwillingness to take on any possible bad debts nor did it expect banks to still be suffering from the credit crunch. Furthermore, the banks are unhappy by the limit on the interest rate for the TEMPME-guaranteed loans, as they can get much higher returns by lending to companies that are so desperate that they are paying much higher interest rates. The result is that applications for loans are being held up at a time when companies are suffocating. If drastic measures are not taken immediately, we will see a chain reaction of business closures. We will see the backbone of our society being broken – all this because, once again, our politicians could not come up with an answer to the challenge of the times.